Leibowitz: A deep dive into the ITC determinations on tin mill product duties

The report was, at least for trade wonks, fascinating. News reports on the case were filled with breathlessly desperate claims about the consequences if the duties were or were not imposed.

The framework

The Petitioners (Cliffs and the USW) claimed that unfairly low prices from imports were destroying domestic production. The organizations representing US consumers alleged that thousands of American jobs in downstream industries producing packaging (e.g., soup cans, paint cans, etc.) would disappear if the duties were imposed.

The relevant statutes are not about those issues, at least not directly. Rather, the law says that ITC must decide whether a domestic industry is injured or threatened with injury “by reason of” imports of dumped or subsidized imports. One key metric in ITC cases is whether imports significantly “undersell” domestic prices.

The ITC looked at the record and concluded that, in this case, significant underselling did not occur. While import levels fluctuated through the three-year period of investigations (2020-2022), import prices did not undercut domestic prices. The Commission’s negative determination did not compare the relative suffering of domestic consumers of TMPs and domestic producers of TMPs. This analysis of comparative harm to upstream and downstream producers, while it may be a logical question, is not covered by the statute.

Rather, the ITC made two critical decisions supporting its negative determinations.

ITC’s conclusions

First, it found that subject imports of TMPs from Canada, China and Germany, taken together, did not materially undersell the domestic product. Indeed, the Commission found that subject imports were generally priced higher during the three-year period of investigation (2020-2023) than the domestic competition, based on industry surveys and questionnaire responses from interested parties.

Second, the ITC found that the significant reduction in domestic production of TMPs was not due to subject imports, but was primarily caused by U.S. Steel’s decision to stop production at most of its major TMP production facilities. (U.S. Steel continues to make TMP at its Midwest Plant in Portage, Ind.). Because price underselling did not contribute to that decision, the ITC found that imports were not responsible for the closures.

The petitioners in the case, Cleveland-Cliffs and the USW, were quick to lay the blame for the failure of the case at the feet of U.S. Steel’s failure to join in the petition. In a press release issued on Feb. 29, Cliffs’ Chairman stated that U.S. Steel’s failure to join the petition “directly led to the ITC’s negative determination. Had U.S. Steel cooperated with the ITC, the Commission would not have been left without the information needed to discern the market forces behind U.S. Steel’s withdrawal from the tin mill products market in the United States.”

That is one point of view. But the ITC did explore the reasons for U.S. Steel’s major withdrawal from the market and concluded that price underselling by imports was not a significant cause.

U.S. Steel fired back, taking issue with Cliffs’ characterization, saying that the company cooperated fully with the ITC investigation. While it was never a petitioner in the case, U.S. Steel noted that it has never been shy about bringing trade remedy cases over the last fifty years.

The timing of the case played a significant role in the attitude of U.S. Steel. In the wake of demand fluctuations stemming from several competitive conditions, including the pandemic, U.S. Steel announced in late 2022 (before the petitions were filed) that it would sharply reduce its presence in the market for TMPs.

At that time, U.S. Steel announced that Midwest Plant, which is part of its Gary Works in northwest Indiana, would be its sole remaining TMP facility. The ITC report confirmed the closures. The company also cooperated with the ITC, responding to questions regarding the relationship between these closures and imports from Canada, China, and Germany. The ITC had evidence that the U.S. Steel exit from the market was not related to underselling by subject imports.

An unusual but sensible verdict

The ITC decision is unusual in trade remedy annals, although not unique. The ITC relied heavily on information in the record that import prices did not undercut domestic prices, a result that is out of the ordinary, to say the least.

Cliffs argued that the Commission did not consider the whole record of imports and inappropriately divided the price comparisons between wide and narrow sheet. (The latter is sheet less than 39 inches in width.) But the Commission faulted Cliffs for not raising the issue early enough in the proceeding. It said Cliffs instead waited until the pricing data was already submitted by foreign producers and U.S. consumers.

It is unusual, but again not unique, for the Commission to criticize parties for failing to raise issues in a timely fashion. The questionnaires were developed in mid-2023, and their data constituted the record before the ITC. As interpreted by the ITC, that record shows the near-total absence of price undercutting by imports. That, in turn, indicates that any injury was not “by reason” of subject imports.

If Cliffs and the union decide to go to court on this decision, they will face an uphill battle. If they do not prevail in court, a new petition will be necessary. That will take at least a year to develop. By then, there will be more recent import figures and perhaps (as I speculated last week) new Commissioners may change the landscape.

The impact of Nippon’s deal for U.S. Steel

The obvious chippiness between U.S. Steel, Cliffs, and the USW is not just about TMPs, of course. The U.S. Steel/Nippon Steel acquisition will also increase tensions, making common action between the factions harder. Cracks are showing on the typically solid front in the domestic steel industry.

Regarding the Nippon Steel acquisition, the USW recently signed a nondisclosure agreement with U.S. Steel and Nippon that will allow the union to obtain confidential information about the capability of Nippon’s U.S. holding company to comply with the USW collective bargaining agreement. The NDA provides a clue that the union may be willing to negotiate the terms of the acquisition rather than waging total war against it.  

Still early days. More fun, no doubt, is in store.

Editor’s note: This is an opinion column. The views in this article are those of an experienced trade attorney on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at info@steelmarketupdate.com.